SEC Filing Hits Back At Coinbase’s Accusations

SEC Filing Hits Back At Coinbase’s Accusations

The US Securities and Exchange Commission (SEC) has submitted a new filing in which it has asked the court to reject a petition from Coinbase.

The US-based crypto exchange has asked for the development of a new regulatory system for the crypto industry.

The request

In a filing in March, Coinbase had asserted that the SEC lacked ‘statutory authority’ where the crypto industry is concerned.

It said that the existing securities regime did not apply to the crypto industry. According to the exchange, the SEC is using its enforcement actions for a ‘power grab’.

Coinbase also added that the federal agency did not have congressional authorization to regulate the crypto industry.

As per the exchange, prospective rulemaking should be used for a decision about implementing the existing securities regime.

It did not come as a surprise when the argument presented by Coinbase was rejected by lawyers for the SEC.

The crypto exchange had requested that a new regulatory framework be developed from scratch, as the existing one is ‘unworkable’. This was in regard to the digital asset industry.

Last week, the SEC submitted a filing to the US Court of Appeals for the Third Circuit. In the said filing, the regulator rejected the exchange’s demand.

The argument

According to the securities regulator, it is using an ‘incremental approach’ to apply the existing regulations to crypto asset securities.

Therefore, it said that this was within the discretion of the Commission and it was also quite reasonable on their part.

Paul Grewal, the Chief Legal Officer of Coinbase, took to X to respond to the argument presented by the SEC.

He said that the agency’s claims that the current framework is ‘workable’ was nothing more than a ‘fallacy’.

He also added that they were confident that the court would also agree with their stance.

Coinbase and the SEC

The SEC filed a lawsuit against the San Francisco-based exchange back in June 2023. Since then, the two have been attacking each other.

The regulator alleged that Coinbase had not registered as an exchange, broker and clearing house, even though it provided these services.

Furthermore, the agency also targeted the staking services of Coinbase. It termed said services as an offering of unregistered securities.

The charges have been refuted by the publicly listed crypto exchange. It has argued that he tokens listed on its platform do not classify as securities.

The criteria for securities are outlined in the definition of ‘investment contracts’. Since then, the exchange has launched an aggressive campaign against the regulator.

It has done so in the form of public statements and court filings. The company has criticized the ‘regulation by enforcement’ approach of the SEC.

Coinbase has demanded new rulemaking and legislation for governing the crypto sector. It is also courting political candidates who are crypto-friendly.

The crypto exchange donated to the Fairshake super PAC worth $21.5 million. Earlier this month, Grewal disclosed that the SEC’s campaign prompted this support.

He said that pro-crypto candidates need to be elected. Nonetheless, the SEC’s lawsuit against the exchange continues, despite the latter’s efforts to get it dismissed.

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